Market Snapshot: What’s Happening Now
• Home Values in the Region
Recent data show the six-county Southern California region (including Los Angeles, Orange, Riverside, San Bernardino, Ventura, and San Diego) experienced a slight decline in home values in August — down ~0.7% month-over-month and ~1.7% year-over-year. Los Angeles Times
While modest, this marks a fourth consecutive month of year-over-year declines. Los Angeles Times
At the same time, one forecast projects home‐price growth of ~3-4% year-over-year for San Diego during 2025-26.
• Statewide Overview
For all of California in September 2025:
- Median sale price: $831,600, up ~2.0% year-over-year.
- Number of homes sold rose ~9.2% year-over-year.
- Homes for sale increased ~10.8% year-over-year.
- Homes sold above list price dropped to 33.2% (down ~7.9 points).
• Mortgage Rates & Inventory
Mortgage rates have recently edged lower: e.g., the average 30-year fixed dropped to ~6.27% in the week ending Oct 17, 2025.
Higher inventory in some markets means more choices for buyers, and sellers are seeing more competition and perhaps fewer multiple-offer scenarios.
Buyers are gaining more leverage
With inventory rising and fewer bidding wars, buyers are in a relatively stronger position compared to the heat of the past few years. For example, the national article “Is Now a Good Time to Buy a House?” reports that while prices remain high, mortgage rates are lower and inventory is up, giving buyers more negotiating power.
In Southern California, the trending slight price declines and increased listing counts reflect this shift.
Prices are moderating, not crashing
Although values are dipping in certain areas, this is not a dramatic collapse. Forecasts for 2025-26 still expect modest appreciation (especially in stable coastal/suburban areas). For example, one forecast for San Diego sees ~3-4% growth year-over-year.
But the slower gains reflect affordability headwinds, high rates, and cautious buyer sentiment.
Regional divergence
While the statewide median price is up ~2%, in many Southern California local markets we’re seeing outright year-over-year drops.
This means location and property type matter more than ever. A home in a footprint of strong demand (good school district, lower risk zone, desirable community) will behave differently than one in a border or high-risk location.
Financing & Affordability still key
Even as mortgage rates improve marginally, they remain elevated relative to historic lows, which keeps monthly payments high. The result: some buyers remain sidelined. From Cotality: “The housing market remains at a crossroads … mortgage rates, inventory shifts, local dynamics, and policy decisions converge.” Cotality
Thus, affordability is still more strained than a few years ago — so readiness (pre-approval, savings, budget clarity) is critical.
What This Means for You (Buyers, Sellers, Investors)
For Buyers
- Good news: More inventory + slightly lower rates = opportunity.
- Watch out: High absolute price levels still pose affordability challenges.
- Tip: Prioritize homes you can hold for several years rather than try to time a near-term flip.
- Location matters: In this moderating market, homes in strong micro-markets (great schools, low natural-risk, desirable neighborhoods) will outperform.
- Lock-in strategy: If you find a home you love and it fits your budget, consider moving ahead rather than waiting for further drops — because further declines may be small or short-lived.
For Sellers
- Reality check: The “seller’s market” of early pandemic years is over in many segments.
- Pricing strategy matters: Homes priced at fair market and well-styled/conditioned will still move. But homes over-priced may linger or require concessions.
- Marketing edge: Highlight property attributes that matter: newer roof/updates, low-risk fire/flood zone, energy-efficiency, desirable neighborhood features.
- Timing: If it makes sense to sell (job relocation, downsizing, etc.), the current market is still stable — don’t assume you must wait for a boom.
- Clear communication: Work with your agent (that could be us!) to set realistic expectations: slower pace = less frenzy, but still opportunity.
For Investors
- With home-price growth moderating, laying out buy-and-hold strategy becomes more about cash flow, tax benefits, and value-add opportunities than pure appreciation.
- Rising inventory may mean more purchase opportunities.
- Be selective: focus on neighborhoods with strong rental demand, favorable zoning, and manageable property-tax/insurance risk.
Call Richard for all your real estate needs.
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